I couldn’t tell you a thing i was told over 5 1/2 years ago about my proposal, i remember now the phone call telling me my IVa had been approved, i still then didn’t fully understand what i was in, i just knew i would be paying less and after 5 years that would be it! its only once i took more of an interest (about 2 years in) and found this forum i fully understood the legal ramifications, how it could affect me in the future etc etc
IVA completion and certificate received 08/10/2012!!!
2007 was a peak year for house prices so I would imagine that the OP equity was even higher when they started the IVA.
I guess you can understand creditors wanting a slice of equity, just as long as the secured loan payments are affordable. Current IVA protocol dictates that the extra mortgage costs should be no more than 50% of your current IVA payment.
Strange that you were not made aware of this at the outset of your IVA.
How much will you be paying fot the secured loan over 5 years and how much have you been paying into your IVA ?
I think that for the vast majority of people, paying into their IVA for an additional year is more beneficial than entering into a penal secured loan or mortgage for a much longer timescale. At least this is what my own clients tell me!
Notwithstanding this, IPs have to supervise the IVAs under their control to the absolute letter, and with earlier proposals there may still be some ambiguity over what is required - although this should have been very clearly explained at the outset.
Hello Annie
You say DFD have their own loan company and that you have been offered a loan. How much is it for , how much will you pay back and at what APR
Gotta say, it definately sounds like moving the goalposts to me, so as to maximise the amount achieved from the IVA.
I would imagine that the poster would be paying more into the pot via a loan than by an extra twelve months of their current IVA payment, and it would seem that this is what the IVA company are trying to screw her into doing.
I am of the understanding in my own IVA that I need to try and remortgage to release equity in the final year,if unsuccesful I will have to extend my IVA by twelve months simple as that.
I would be more than miffed, just as the poster is, if this turned out to not be the case and I was railroaded into taking out a lengthy, costly loan.
"When the seagulls follow the trawler, it is because they think sardines will be thrown into the sea".
The OP may not have provision for a 12 month extension in their IVA in the event they cannot release equity and therefore no entitlement to an extension before other means of addressing the equity clause have been investigated. While a 12 month extension benefits the debtor, I would imagine it is the last resort for creditors if they know alternatives are available and the proposal allows for these to be explored.
Ryan mentioned the other day that secured loans are becdoming available to help people in ivas fulfill their equity requirements although re-mortgages are as yet still not available.
The more I read into the IVA Forum the more scared I get, I've just sent my papers and so have not even been accepted as yet. Keep wondering am I doing the right thing. I hope to goodness I am. My husband and I are about 40,000 in debt. I have equity in my home at the moment of about 20,000 so what's the best option release equity if possible or add extra 12 months. I really don't want a loan, I vowed I will never touch credit again. Really worried now!!!!! So i'm guessing i really have to check i have an extension before i sign. The dark tunnel keeps on spinning !!!!!!! :@ Annie i hope things work out for the best for you :)
I do think the crux here is how much needs to be borrowed and the actual repayment. I see Michael's point and agree with Andy that such an arrangement must be affordable. An awful lot will also hinge on the exact wording of the proposal.
Yes, modern proposals generally state that, if unable to re-mortgage or rasise equity, then a 12 month extension would be imposed instead (which, as Mel mentions, is often less of a financial burden.
HOWEVER, an extension is not a right and if a way can be found to release the equity then that has to be the first route to take, as agreed in the proposal.
My understanding is that the loan offered by the affliiate company, although based on a term of 15 years ( presumably to keep the monthly payments down ) is intended to be replaced with a re-mortgae once the debtor is clear of the IVA and able to secure a re-mortgage at better rates.
That said, as above, it all depends on affordability. My prime concerns are: Do DFD get commissions on these loans (in addition, presumably to the 15% share of realisations)? And, if the proposal specifically uses the term "unable to RE-MORTGAGE" --- then the debtor is only obliged to attempt a RE-MORTGAGE ..... not get a loan (secured or otherwise).
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Hi Eliza. Much will depend upon the level of equity in 4 or 5 years time ( which could go either way!) and the wording of your proposal. Who are you going with ?
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
You wil be OK with Andy in your corner .... like many of us, he has been there and got the tee-shirt ----- as well as written the book, and been heaped with well deserved industry accolades.
He's better looking than me too .... am I jealous ....HELL YES !!!!!
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
The terms of the equity release should be quite specific, and re-mortgaging does not equate to the same as taking out a secured loan. Fine if people would rather do this than extend the term of their IVA, but they will be repaying that loan over a far lengthier period with no guarantee that they will be able to re-mortgage at more favourable rates in the future - which in itself will prolong the repayment period perhaps even further.
I think creditors could start to change the wording of the equity clause if people are deliberately trying to avoid raising equity. A remortgage is different to a secured loan and indeed probably more expensive in the current climate and it is also very easy to get turned down. However, it is wrong to think that six year IVAs are automatic because the mortgage market could change and products become available again to those in IVAs as they were a few years ago.
The equity clause used to say refinance, third party funds or even sale and if creditors feel that some clients are not adhering to the spirit of the equity release clause then they could easily reword it and make it a lot more strict. This would not only affect people in future IVAs but any clients seeking variations for any reasons could find their IVAs modified.
Michael I think your making a compelling case for bankruptcy in some instances.
When I entered my IVA it was with the intention of saving my property, eliminating my mountain of debt, repaying creditors at least part if not all of my debt and getting a fresh start after 5 (possibly 6 years), however, this has come at a massive price to my own financial freedom, not forgetting that of my family and I have seriously considered (even at 32 months) whether its all been worth it, just to save a pile of bricks & mortar (which if creditors have their way in the months to come may not even be possible).
If creditors start moving the goalposts then I think they'll find that bankruptcy (with less return to them) will be seen by many as an even more compelling option then IVA....particularly as Bankruptcy has a set date for completion (at a much reduced term), whereas IVA's (with added loans at the end) could be never-ending.
Suppose I will never know in my case until I receive that much coveted completion certificate.
Agreed Melanie...."the terms of equity release should be quite specific".
Last edited by Pennyless on Thu Jul 05, 2012 12:09 pm, edited 1 time in total.
I came into this world with nothing and still have most of it left!
:)
